I vehemently disagree with the ways in which this article implies that western nations can seek redress using the enforcement mechanisms of the WTO. Even a cursory analysis of the WTO rules and a close reading of recent trade disputes shows that China has done an excellent job of gaming the system such that it is largely immune from harm.

Take the rare earths example. Restriction of rare earth commodities in China has been carefully justified under the listed exceptions for technical barriers to trade (TBTs) in the WTO TBT agreement - these being safety and environmental compliance - instead of the clear objective, which is to encourage domestic production of rare earth-derived products.

The Economist implies that the aggrieved parties can seek redress through WTO enforcement mechanisms. But there are many problems with this idea. All trade enforcement is fraught with a history of mutual dispute wars. WTO enforcement cannot compel a nation to change its policy; if China wants to restrict its rare earths, no one can stop it. In a world where companies compete to be global scale, bilateral tariffs the WTO allows members to use for redress lose their relevance - only an all-against-one mandatory tariff scheme will work, and such a regime is not within the scope of the WTO treaty. The very fact that WTO enforcement is bilateral only implies that it is designed for a world in which bilateral trade matters the most.

So if you note the fact that even a small subsidy is a technical violation of the WTO subsidies agreement, and note that nearly every major trade dispute in the WTO has resulted in tit-for-tat allegations on both sides of the issue, and further note that the WTO does not distinguish between a small subsidy/barrier and a large one, and you find that a formal WTO complaint results in something awful for the country bringing it and nothing bad for China.

Say the United States wants to bring a formal complaint against China for dumping solar panels (somehow, this isn't so implausible given the current news). China responds by initiating one against the US. Even though Chinese subsidies to solar panel manufacturers amount to hundreds of billions spent over the past few years compared to the US's niggardly package of tax incentives and loan guarantees, the WTO would not make a distinction between the two.

Who is hurt more from being shut out of the other's market, the Chinese or the Americans? Probably the latter, especially if you consider that a single formal trade dispute might provoke retaliatory ones in other industries. Furthermore, if we consider that the solar panel manufacturers are competing to be global scale, then the tariffs thrown up by each nation in the dispute don't matter that much in the grand scheme of things, since the customers in other nations importing their solar panels don't have the tariffs up at all. At that point, only the magnitude of the subsidies matters, and let's face it, Chinese state-backed companies are going to outcompete most Western ones on that front easily.

WTO or UN aren't Americans and Europeans's companies.China or other developing countries haven't the duty to let US or EU become more richer.

Nothing can help you or your country if you just want to sleep in home,not work harder than others'.

More fierce market competition is better for everybody including China.If we can not born in a developed China,we will be glad to die in a developed China in the future.If we can not achieve ours goal,we should go to hell!

This article is interesting but written with the glasses of laissez-faire on. Arguably the most interesting aspect of China's rise is how it was done (mentioned elsewhere in this issue)--namely state capitalism. Private investors don't want to hear that since it gives much control to the State. However, China merely followed the blueprint of Japan, S. Korea, Taiwan and numerous others who have succeeded. What's not said is that our own economies are also largely driven by State Capitalism. The big infrastructural sectors are all dominated by State policies--OIL, Aerospace, Defense, Housing. Imagine Exxon-Mobile without our interventions in the ME. Imagine Boing, Airbus, Lockheed or Raytheon without the defense and commerce departments paying exorbitant tax dollars to keep them in business. And housing without Fannie Mae or Freddie Mac (the latter may not seem so smart but that's what's keeping a lot more people from being thrown out of their houses). So the real argument is why not just agree that some form of state planning is actually important for the economy and try to do the best--accept that reality and we can start to have a rational method of dealing with industrial policy however messy it may seem.

Some encouragement here - signs that the Economist is rolling over in bed and starting to wake up. But it has not stopped dreaming yet, as is evidenced by the positive comparisons it draws with Japan’s actions at a time before the WTO existed, and by the assumption that China’s positive moves justify its trade partners’ pretense that China follows the rules of the market.

No one is perfect, nor is “managed” trade – a dirty word when I worked on trade policy in the US government in the 80s. But when China manages its trade in a way that skews the markets to its advantage, it is naïve for its partners to continue business as usual, as if the cheaper Chinese goods that are destroying sectors of their partners’ economies are purely the result of comparative advantage. The price mechanism is needed to determine where the advantage lies, and market-determined exchange rates are needed to make that price mechanism work. Until China allows that mechanism to do its work, as well as other rules of the market, China should not be allowed to do all the managing on its own.

Letting China into WTO in 2001 was largely a con by Western companies to increase their profitability at the expense of local jobs. Making goods at half nothing out East and selling them in the US/EU at Western prices was the closest thing to marketing manna from heaven. The usual supply-demand link was broken and so high interest to curb inflation no longer needed. Such low interest spurred high debt for over a decade and led to housing bubbles and the general financial mess in US/EU of recent times.

Back in ’01, China’s entry to WTO wasn’t volubly opposed by Western electorates fearing possible loss of jobs - the question is why so?

Pliant media & lobbying were obvious sources. But so too were some then-recent experiences…

In Europe, the newly-freed communist states added about 80m of cheap competitive labour. A bump definitely – but soon absorbed.

Meanwhile in America, Ross Perot’s anti-NAFTA ‘92/’96 campaigns decrying the “sucking sound down South” (Mexico) slogans had also come to naught. Most workers, it seems, were reassured by that failed prophesy. But they also failed to notice that Mexico was not China - neither by size, industry nor temperament.

And so present Western pains unfold in reaching for a solution. Thing is tho’ - that it all had to happen anyway - somehow, sometime - as the planet melds into one in heading to its future.

If China wants to keep its rare earth, that is perfectly acceptable. It is theirs, after all.
Systematically stealing foreign technology is not.
As there is no rule of law whatsoever in China, you know that you are on your own when trading with Chinese, they know it and they bank on it. So double check what they deliver, never let them near vital information and never give them credit. Just recount your fingers after every handshake, and you can do business with Chinese.

This is wrong. I recommend you read Mr Raj Bhala's account of the Chinese negotiations which preceeded China's entry into the WTO, especially as regards the US Congress quite serious threat to deny permanent normal trade relations to China if President Clinton was to sign the bilateral agreement on market access with the Middle Kingdom.

Trade unions and import-competing industries in western nations were very vocal in the late 1990's on the question of China's accession. This is one of the reasons why the negotiations dragged on for so long - and why their outcome is so blatantly discriminatory.

That China does not always play fair nowadays is one thing. But it is wrong to assess the negotiations in retrospect and pretend that more could have been obtained back then. The specific commitments which have been demanded of China to gain access to WTO exceeded both in scope and in numbers what any other WTO Member had agreed to until then.

China offers a great platform and an great example for developing countries to follow.
Clearly the global markets cannot be fair, in the sense that China has a war chest to stablilise yuan for the benefit of its producers and also the rest of the world making prices cheaper, but also the west, especially USA has an undue advantage, its like the locus, or centre of gravity, USA can finance its needs by printing money and not default or without a risk of devaluation of its currency. This is what they did by doing what bananke called "tweaking" the numbers of the major banks in 2008, Awhooping 7.7 trillion dollars, twice its regular annual budget.

The challenge for China are greater due to its large population and ageing demographics. They need desperate measures to keep the country stable.

Good points, though discouraging personally, since the Chinese solar panel manufacturer I invested in is now worth about a fifth of what I paid a few years ago. What would happen if it really had to compete!

The Economist says: “They have a variety of complaints: that China exports too much…….So celebrate China’s ten years in the WTO: we are all richer because of it. But, when it comes to trade, China’s rulers now badly need to grow up. Their cheating is harming their own consumers and stoking up protectionism abroad…”
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But the big question is still who is cheating whom?

And did you know that about 53% of China’s export are done by or on behalf of FDI? Small wonder the export just keeps growing.

If China wants to be taken seriously on the national stage, it's time to play by the rules. The human rights violations are bad enough; no sense adding trade cheating on top of it.

The protectionist sentiments simmering in Congress are absurd as well, however; you don't foster globalization by taking an eye for an eye. This is a childish solution to a childish problem.

By claiming economic superpower status, China has a certain responsibility. Their market is a large and powerful one (from a consumption, investment, and labor perspective), so they have to be taken seriously. This does not mean overlook trade cheating.

The two issues I have the most problem with are the JV requirements for foreign multinationals to participate. It creates an artificial barrier to proper resource utilization that need not exist. China would be seen as a less risky investment opportunity without this, and I doubt the argument that it is required to guarantee some benefit to the Chinese state. Second, intellectual property protection should be a given at this point when competing on the international stage. Everyone wins when research and development is protected.

China will be sitting at the kids table as long as they act like one; its their choice.

Good points, though discouraging personally, since the Chinese solar panel manufacturer I invested in is now worth about a fifth of what I paid a few years ago. What would happen if it really had to compete!